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Extending Paid Parental Leave

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Parents, parents-to-be, child carers and educators would have been happy to hear that Labour MP Sue Moroney’s bill on extending paid parental leave was pulled from the ballot earlier this month.

Moroney’s bill would see parental leave extended from its current 14 weeks to six months by 2014.

New Zealand currently offers less paid parental leave than other countries including Australia, which offers longer leave periods and pays more each week and the UK which offers 39 weeks paid parental leave.

Extended parental leave is thought to have many benefits including better bonding between mothers and their babies and allowing mothers to breastfeed for longer in line with World Health Organisation guidelines, which say babies should be breastfed for the first six months.

It can also benefit businesses because parents do not feel forced back into their job early due to financial constraints.  Parents who are able to stop work for an extended period generally return in a more positive frame of mind and are more settled. The provision of adequate parental leave helps to retain skilled people in the workforce, reduces the cost of recuiting and training new staff, and supports business growth. 

An extension to paid parental leave may see the number of babies and young children enrolled in early childhood education (ECE) dropping; however, any loss here is likely to be made up in increasing numbers of older children attending as the Government plugs ECE participation.

One person who is not supporting the plan is current Families Commissioner Carl Davidson. The Families Commission has traditionally supported the idea of extending paid parental leave and has lobbied in the past for leave to be extended to one year, but this time Davidson has said it is probably unaffordable in the current economy. The idea of a year’s paid leave was the “gold standard” which had to change due to economic circumstances.

Supporters of the bill have criticised Davidson and accused him of stepping outside his remit by entering into economic debate.

The bill has been given broad support among politicians; however, National’s Finance Minister Bill English has now said National will veto the bill because extending the scheme is too expensive.

Under Parliament rules, the Government can veto a bill without voting if it is deemed to have more than a minor impact on Government finances.

English said the Government would have to borrow money to implement the scheme at a time when the country has a deficit that needs to be reduced.

Funding the current paid parental leave provisions cost $150million a year English said and extending the scheme would cost an extra $150million each year.

Moroney claims the Government is putting forward the worst-case scenario and that costs would be lower, around $80million over a three-year period.

The Government had not factored in things which would offset the cost such as the tax it would get back from paid parental leave or the reduction in ECE subsidies because families would need less government funded childcare. 

Moroney said her bill was affordable but said if it was not passed then she was willing to look at any options that extended paid parental leave.

Prime Minister John Key says National has not ruled out extending paid parental leave in the future if the country’s financial state improves.

National’s veto cannot be used until the bill’s third reading so it will still be debated in Parliament. The bill has yet to have its first reading but it is expected to pass through the initial stages.

 

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